We sold our manufacturing business last month. The biggest hurdle wasn't finding a buyer or getting financing, it was getting our franchisor to waive their Right of First Refusal. They had 30 days to match, and they sat on it for 25. Finally got the waiver signed and closed two days later. Happy to share how we pushed it through.
ROFR
How getting corporate to sign the ROFR waiver let us close our deal smoothly
So what exactly did you do to get corporate to move faster? We're stuck in a similar situation with a restaurant franchise.
The key is usually to present a deal that's clearly worse than what they'd want to match. If the buyer is paying a premium with crazy terms, corporate often waives because they don't want to match. Was that your play?
Yeah, we had an all-cash offer with a 45-day close and a personal guarantee from the buyer. Corporate didn't want to match that. But they still took their sweet time. We had our attorney send a draft waiver with a deadline and a reminder that time was of the essence per the contract.
Lurker here. What happens if they don't sign the waiver? Can you just close anyway?
Not without risking a breach. The ROFR gives them the right to step in. If you close without a waiver or expiration, they could sue to unwind the sale. Always get it in writing.
Exactly. We had a backup plan to extend the closing date if needed, but thankfully didn't have to. The wwaiver was signed with 2 days to spare.
This is why I always tell sellers to push corporate early. Start the clock as soon as you have a signed LOI. Don't wait for the purchase agreement.
@BizBroker that's good advice. We waited until the PA was signed, and now we're twiddling our thumbs.
Also, sometimes corporate will waive if you agree to a small fee or a minor amendment to the franchise agreement. Did you have to give anything up?
Nope, no fee. But we did agree to a slightly shorter transition period fod the new owner. Corporate wanted to make sure the buyer was qualified, so they interviewed him. That actually helped—they realized he was solid and waived.
Interesting. So corporate interviewing the buyer can be a good thing? I thought it would just add another layer of delay.
It can go either way. If the buyer is strong, it speeds things up. If they're weak, corporate might use it as an excuse to drag things out.
Another trick: have your attorney draft the waiver and send it to corporate with a cover letter stating that if they don't respond within X days, you'll assume they've waived. It's not legally binding in all states, but it often lights a fire.
Thanks for the tips, everyone. I'll try the draft waiver approach and see if it helps.
Good luck. And remember, if corporate does match, you're back to square one. But at least you'll know.